Following the judgment of the Court of Justice of the European Union (CJEU) in Commission v United Kingdom (C-161/14), in which the CJEU concluded that the UK’s existing legislation (Schedule 7A VATA 1994) was not consistent with EU law, the government announced its intention to amend the relevant legislation in Finance Bill 2016.

In December 2015, the government published a discussion paper seeking views on the proposed changes (details of which were reported in our December VAT update). The date for responding to the government’s consultation has closed and HMRC are considering the responses it has received.

In the meantime, the Minister for State for the Department of Energy and Climate Change has confirmed that if the rate of VAT changes as a result of this EU ruling, the government will consider various options to maintain a suitable rate of return for investors under the feed-in-tariff.

The parliamentary discussion on solar energy and VAT is available to view here.